As part of the Heard at Ops series, Andrés Choussy of FIS explains why firms are returning to the fundamentals, how that focus will affect the industry, and the challenges and opportunities in the coming year. Watch the video and read the Q&A below.

Q. Why are firms returning to the fundamentals?

It is essentially because of three main reasons. First, the macroeconomic environment: Over the past year, we have had an increase in interest rates and the cost of funding has gone up. Inflationary pressures have also brought about a change in the cost of labor, how companies perform and how investors are valuing the business.

Long gone are the days in which investors were looking only at revenue growth. Now, there is increased reliance and focus on cost, profitability, and margins. From a macro perspective, fintech companies need to adjust how they think about their day-to-day operations.

Second, a loss of confidence in crypto: Last year, we talked about the biggest risk that the industry faced, and it had to do with one big idiosyncratic event generating a loss of confidence in institutional digital assets. And that is what has happened. Where we stand right now, unregulated crypto will no longer be doable.

Last, but not least, regulation and the increased focus on resilience: Regulators have come in and taken a much more active role, particularly as it relates to digital assets and crypto, but also as it relates to fundamental areas. For example, there is an increased focus on cybersecurity and resilience. These themes have been around forever but have taken on a much more important role given some of the recent issues that we have observed over the past year.

Q. How will this back-to-basics focus affect the industry as a whole?

Operations teams and fintech companies will need to focus on their core competencies as they return to the fundamentals. This is going to result in an increased focus on partnerships. Firms should learn how to partner better across the different steps of the trade lifecycle.

The industry needs to embrace the concept of modular ecosystems that are API-driven and allow for integrations to govern how data flows back and forth between various participants. We cannot think in terms of monolithic big technology and single platforms anymore. The back-to-basics approach will prompt companies to focus more on modular solutions and to standardize the ways in which they tackle problems.

Q. What will be the biggest challenge for financial services in 2024?

The greatest challenge is what’s on the mind of everyone here at SIFMA Ops – and that is the move to T+1. But I’m optimistic because that problem precisely exemplifies how we, as an industry, should be tackling all types of problems. It is not about technology. The actual problem is a risk and operational one and that is how the industry has approached T+1, so I am relatively confident about the transition.

To me, the biggest challenge for the industry is going to be how to operate in a world where funding is not easily available. To that point, the greatest opportunity will be to find a way to successfully navigate this challenging environment and to build, implement and deploy offerings more efficiently.

Andrés Choussy is Head of Trading and Asset Services at FIS Capital Markets.

Watch his session from SIFMA Ops 2023: Is the Affair Over?

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